The Juneau Assembly advanced a series of policy changes Thursday that would leave lower-income seniors entirely exempt from paying city sales tax, while reducing wealthier seniors’ benefit. Several other sales tax proposals failed.
The city’s finance officials forecast the changes will raise an extra $1 million a year from local seniors. Currently, all resident seniors are eligible for exemption from Juneau’s 5 percent sales tax.
The package the Assembly backed Thursday would keep the exemption in place for seniors with incomes below 250 percent of the federal poverty level. That cut off varies from year to year and by household size. For a single senior this year, it works out to $36,800.
Wealthier seniors would still be eligible to skip sales tax on essentials: food, residential electricity, heating fuel and municipal water and sewer fees.
“The low-income seniors, those on fixed income, are also protected by the measure we just took,” said Assemblywoman Kate Troll. “So the seniors have been very well taken care of.”
The sales tax changes were considered at the committee level and are not final. They still must be drafted as an ordinance, presented in a public hearing, and read and voted on twice by the Assembly.
Two other sales tax changes were considered that failed. Mayor Merrill Sanford proposed increasing the eligibility age of the senior sales tax exemption from 65 to 70 over five years. The phase-in was intended to soften the blow, and the Assembly initially backed Sanford’s motion in a 5-4 vote.
But, over the next 25 minutes, they worked out a logical problem with that phase-in; since we all age on pace with the phase-in, no one would actually be phased in.
They’d already moved on to other changes when Assemblywoman Karen Crane said, “They’re not getting a double whammy, they’ve had a total whammy. Nothing for the next five years.”
With a fresh, multicolored chart by City Manager Kim Kiefer on the white board, the Assembly voted unanimously to reverse on raising the eligibility age.
Another net-positive sales tax proposal by Assemblyman Loren Jones failed by one vote. He sought a ballot question asking voters to exempt everyone from paying sales tax on food while raising the overall sales tax rate to 6 percent.
Assemblywoman Debbie White voted no.
“There’s talk about an upcoming state sales tax. We’re going to increase the cost of living for everybody by doing that. And right now, I don’t see this getting past the voters.
Assembly members on both sides of the vote agreed that taxing food was regressive, meaning it puts a disproportionate burden on the poor.
Assemblyman Jesse Kiehl was the swing vote. He was sympathetic to eliminating the tax on food, but said raising the overall sales tax rate would put Juneau service providers and retailers at a greater disadvantage, particularly against tax exempt online retailers.
“I don’t want to push people any faster toward buying outside than we have to,” Kiehl said.
Next year, Kiehl said he intends to propose less capital spending so the sales tax can be lowered to 4 percent.